Annual Meetings: Kim, Lagarde Talk Climate Change and Growth

Can countries tackle climate change and still grow? Yes, say the leaders of the World Bank Group and International Monetary Fund – and the need to do so is urgent.

Bank Group President Jim Yong Kim and IMF Managing Director Christine Lagarde weighed in on development and climate change in their first public discourse together on the topic, ahead of Annual Meetings with finance and development leaders this week.

“Technology has advanced so much that you can grow very robustly and go down a cleaner path,” said Kim at the Economic Case for Climate Action, which also touched on fuel subsidies, carbon markets and taxes, renewable energy, cities, and climate-smart agriculture.

Dealing with climate change should be “very high” on member country finance ministers’ list of priorities, added Lagarde.

“Climate change is a short-term, a medium-term, and a long-term issue, and if you don’t deal with it in the short term, it will come to haunt us, our children, and our grandchildren,” said Lagarde.

She said the key to addressing the problem is to “get the pricing right” and to gradually phase out and remove energy subsidies that amount to $485 billion globally today.

“If the price of fossil fuel is right – because it incorporates the negative externalities – then it encourages investment in cleaner fuels without the need for subsidies,” she said.

Also needed: long-term financing for sustainable energy in developing countries; putting fast-growing cities on a clean development path; and “climate-smart” agriculture that incorporates climate-resilient farming techniques and crops. These are all things the World Bank Group can help with, said Kim.

“Please don’t assume that tackling climate change means that all your costs are going to go up and that there are no good options,” said Kim. “...keep an open mind as to all the things you can do right now, today, that would not only create a cleaner future, but help you grow economically.”

The event, moderated by Zanny Minton Beddoes, economics editor for The Economist, also featured a panel of ministers from Peru, the Philippines, and Zambia, and was webcast, live-blogged, and tweeted in multiple languages with #wblive. Replay the live blog and webcast.

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